Is Countrywide a boon for Bank of America?

Most of the words used to describe mortgage lender Countrywide Financial are either unkind or unprintable. But Bank of America Corp. (BAC), which bought the embattled company for $4 billion in 2008, has a much different view.

In an interview with Bloomberg News, Barbara Desoer, BofA's head of mortgage, home equity and insurance said, "Volume is good, application quality is holding up and the acquisition of Countrywide is really paying off for us with the additional capacity. . . . Thank goodness we have it."

I did a double-take when I saw a rare positive quote about Coutrywide, the largest mortgage lender There was widespread suspicion that BofA overpaid for Countrywide and Merrill Lynch. Nonetheless, Chief Executive Kenneth Lewis has called the two companies "stars" when he said his company would be profitable this year The hoopla around the financial services firms announcing they were profitable still seems really sad since expecations continue to be so low.

Record low mortage rates are certainly helping BofA. As Bloomberg notes, purchases of mortgage bonds by the Federal Reserve have helped push rates down from 6.46 percent in late October, to a record 4.96 percent in mid-January. Currently, the average rate on a 30-year mortgage is 5.03 percent. People getting these low rates are probably going to need good credit. Homeowners looking to refinance at these lower rates probably will have to pay "points" to their lender.

Nonetheless, BofA is making a huge push into housing. The bank has added 3,000 workers to its orgination unit and more than doubled the staff of the business that deals with troubled borrowers. "Still, the company hasn't always provided the best service, in part because of the volume of calls for help," according to Bloomberg.

One area where BofA hopes to expand is jumbo loans which can range from $411,000 to $729,500. The problem, of course, is that many people can not afford their existing mortgages or owe more on their home than it is worth. Housing prices are still not expected to rebound for a while even with President Obama's housing plan.

So, the question of whether BofA will still find Countrywide is still a blessing at the end of the year is still an open question.